Buying Real Estate at Tax Sale

How To Buy Real Estate At Tax Sale

Buying tax delinquent property at tax sale is a profitable land buying method. However, buyers sometimes pay too much for the property or buy real estate that has serious title problems. Often the purchased property is not as expected, it may be inaccessible, a steep hillside, desert or undesirable in some other way. Follow the steps below to avoid these problems.

Tax Sales Process

Property is sold by the county for delinquent taxes. It often takes five years of delinquencies before the property is sold. Some states sell tax certificates. In this case you are buying the tax debt from the county not the property. We will focus on states that conduct auctions.

After meeting the requirement (number of years of delinquent taxes) the auction is held. Like any auction, the property is sold to the highest bidder. It is usually held annually at the local courthouse.

Property owners can redeem the property anytime before the actual auction. This means that the preparation and research I will describe below may be wasted if the property is redeemed before the sale.

Buy Before Property Tax Sale

Before going through the steps I want to share a great strategy to buy tax delinquent land. Contact the owner before the sale and offer to buy for a small amount. Then pay the taxes and you will own the property before the sale. Many owners will jump at the chance as they know they are about to lose the property.

This may not always be to the advantage of the seller as they are entitled to any proceeds from the auction above what is owed in delinquent taxes.

Check For Clear Title

Always have the title of the property checked before making a bid. This takes preparation and you will need to contact a title company before the auction. My title company is often contacted the day before the sale to check the title. That is not enough time to do a title search.

Many people buy property at the auction, discovering later there are title problems. The land may have loans, liens or other title problems. Don’t buy without knowing the title condition.

Visit Tax Deed Sale Property

Visit the property before the tax sale. Know what you are buying. There may be a reason the property is going to tax sale other than the owner can’t afford the taxes. The owner may know that the property has no legal access, is a steep mountain, or a sand dune.

Determine Property Value

Know the approximate land value of any property you want. It is easy to pay more than the property is worth at an auction.

Check Real Estate Listings

I have seen property sell at a tax deed auction for 2 or 3 times what adjoining property is listed for by a realtor. The listed property is not only cheaper but you also receive clear title, and have a realtor to do much of the work and show you the property.

Why buy real estate with title problems if you can buy property through a realtor cheaper and without title problems?

Avoid Auction Fever

Most importantly avoid auction fever. Auctions are exciting and it becomes a competition to win. Many bidders do it for fun with no idea what they are buying. Focus on a couple of properties and don’t pay more than they are worth.

Tax auctions have become so popular that owners are now buying property and intentionally not paying the taxes. When the real estate is sold at auction they receive any money above the delinquent taxes. If the property sells for a good price they clear a nice profit.

A Tax Deed Sale can be a great opportunity to get property at a great price but only if you prepare by doing your research before the auction.

February 27, 2016

Buying Real Estate at Foreclosure Auctions

Buying Real Estate At Foreclosure Auctions

To be successful buying land at foreclosure auctions, or more correctly Trustees Sales, you need to understand the foreclosure process. The process is long and complicated causing many to avoid them. Because of this, it is a great opportunity.

Understanding Foreclosure Process

You must understand the foreclosure process to be successful at trustees sales or foreclosure auctions. Understanding the process will help you decide the property in foreclosure, when the auction will be held and what a reasonable price is.

Finding Foreclosure Property

To buy at Trustee’s Sales you must find properties before the Trustee’s Sale. Trustee’s Sales are advertised in the paper before the sale, using a Notice of Trustees Sale. If you see the Notice the first week published you will have several weeks to research the property.

If you want more time to research you can review the Notices of Default recorded in the county recorders office. These are filed at least 3 months before a possible sale. The downside of using the Notices of Default is many of these properties will be paid and not go to Trustees Sale.

Know Property Value

You should know the approximate property value. The amount owed on foreclosure property is often higher than the properties value. If the amount owed is more than the property value – STOP! Don’t spend anymore time on this property.

Know Amount Owed

Before attending you should know the amount owed on the land. The first bid is made in behalf of the lender and will usually be for the total amount owed. If the amount owed is more than the property value there is no need to attend the sale. You don’t want to pay a premium for foreclosure property.

In a market of declining property values many of the properties at foreclosure auctions will be worth less than the amount owed. Be careful and don’t pay more that the property is worth. You may have to search many foreclosure notices to find an auction worth attending.

To find the amount owed you can call the individual or company handling the Trustees Sale. Their contact information will be in the Notice of Trustees sale published in the paper. If they refuse to give you the amount you can get a copy of the Trust Deed from the courthouse. You can estimate the amount by looking at the age and amount on the Trust Deed.

Research The Property

After you have found promising foreclosure candidates you should have a title search performed on the property. Unlike a standard purchase there is no title insurance on trustees sales so it is possible to buy land with title problems, or unpaid liens and mortgages.

Attending The Auction

If you find a property, at a good price, with no title problems nor outstanding liens, attend the auction ready to comply with the instructions in the Notice of Trustee’s Sale. This often includes certified funds at the time of auction for part or all of the bid price. Usually you must have a set amount at the auction and the rest within 24 hours.

The auction is handled like any other auction. Bids are taken and the high bid will win the property, subject to meeting the conditions in the Notice of Trustees Sale.

Buying property at foreclosure auctions is more difficult than many other methods. Because of this most people avoid them. This makes it possible to find excellent deals. It just takes work and preparation.

February 15, 2016

Real Estate Foreclosures in Utah

The real estate foreclosures process is long and complicated. The documents used in real estate loans are standard across the nation, but the process is governed by state law, making the process unique to each state.

This is an in depth look at real estate foreclosures in Utah. Keep in mind each state has differences.

Default

Foreclosure starts when a default occurs. A default occurs due to the action or inaction of the borrower or property owner. The most common default is failure to make payments, but is not the only default.

Breaking any agreement in the closing documents constitutes a default. These include not paying property taxes, not maintaining property insurance, destroying the property, etc. This is the start of a real estate foreclosure.

Trustee

Foreclosure auctions, or Trustees Sales as they are more correctly termed, are conducted by a Trustee who handles all phases of the foreclosure process. Trustees must be a attorney, title company, lending institution or certain government agencies.

Regardless of who is the original Trustee on the Trust Deed, it is usually changed to an attorney or title company when a default occurs.

Notice of Default

When a default occurs a Notice of Default is recorded at the county recorder’s office. A certified copy is also sent to the owner no later than 10 days after recording. The Notice of Default states what the default was. The lender must then wait 3 months before taking further action. During this three month period, the Borrower is allowed to correct the default.
Correcting the default would include paying the overdue payments including interest and penalties, paying the taxing, obtaining insurance or correcting whatever default occurred.

Notice of Trustee’s Sale

As the name implies a Notice of Trustee’s Sale is a public notice that a default has occurred and was not cured within the three month period.

If the default is not cured in the three months, the Trustee publishes a Notice of Trustee’s sale. This notice must be posted in at least three conspicuous places in the city or county where the property is located. It must also be posted on the property. It is then published in a local newspaper, once a week, for 3 consecutive weeks. The last publication must be at least 10 days, but not more than 30 days before the sale date.

During this period the borrower has the right to payoff the property but the lender is not required to accept just delinquent payments as during the Notice of Default phase.

Trustee’s Sale

If the default is not cured by the time of sale the Trustee holds the sale at the published location and time. The first bid is automatically placed in behalf of the lender and is usually the amount of the loan payoff plus interest, penalties and foreclosure fees. Anyone can bid at the Trustee’s sale as it is held as a public auction.

Funds to Purchase

To place a bid at a foreclosure auction or trustee’s sale, bidders are usually required to have certified funds for a set amount (often $5,000) and must pay the remaining bid price within 24 hours. The amount needed at the auction will be listed in the newspaper in the Notice of Trustee’s Sale.

Trustee’s Deed

After the auction is completed a Trustee’s Deed will be issued by the Trustee to the successful bidder. This deed conveys all interest of the Lender but may not convey all the property interest.

Conclusion

The real estate foreclosure process is painful for homeowners. For those looking for a great investment it is worth a look.

February 6, 2016

Cheap Land and How To Find It

Cheap Land and How to Find It

Cheap land or anything else is not always best of course, but in this case we are discussing getting a good deal on land.

Utah Tax Sale

In a Utah Tax Sale the delinquent tax property is sold at public auction. The county keeps the amount owed for delinquent taxes, plus penalties and interest, any remaining money is forwarded to the owner.

You can attend the tax sale auction to buy property. You need to research the property ahead of time, to find out the approximate value, any title problems that the property might have (that aren’t extinguished by the tax sale), and other details such as legal access, water rights, etc.

Many people get an excellent deal on property at a tax sale. Others pay several times what the property is worth, so do your research to get the best price possible.

Another option is to contact the owner before the tax sale and make them an offer on the property. You will avoid the auction itself and often pay less than you would at the auction. A county waits until there are several years of delinquent taxes before selling the property. You can contact the owner before this time and often get a good deal.

Foreclosure Property

Foreclosures may be the best for how to buy cheap land. There are three basic stages in a foreclosure.

1. Default

During the default stage the property has not been foreclosed, but the seller has been notified that a foreclosure is in progress. During the early part of this stage the foreclosure can be automatically stopped by paying the overdue amount or a negotiated amount. You can contact the owner and offer to buy the property. Owners in foreclosure can be very motivated to sell.

2. Foreclosure Sale

If the delinquent amounts are not resolved during the default phase the property goes to a foreclosure sale. Anyone can bid on the property at the sale. Contact the company handling the foreclosure and ask what their requirements are.

Similar to tax sales, you need to do your research before the foreclosure sale. Know what the property is worth before bidding.

3. Foreclosed Property

The lender usually receives the property after the foreclosure sale for a variety of reasons. Few people show up at foreclosures and often the minimum bid is more than the property is worth.

The Lender is motivated to sell the property quickly and will entertain any reasonable offer. Contact them and make an offer.

Assume The Existing Loan

Although this is more difficult to do, it can be an excellent way to buy land. The current owner may be tired of the property and willing to sell it for little or no money, if you will assume the payments. This only works if the property is financed by an individual. Banks don’t usually allow anyone to assume their loans.

This method of buying cheap land can be combined with the tax sale or foreclosure methods above. You can contact the owner, pay the delinquent amounts, and take over the payments. Use an attorney or title company so the proper paperwork is filed, and the land is properly transferred to you.

Bankruptcies

Bankruptcies are public. You can contact the court or attorney handling it and offer to buy property involved in the bankruptcy. You will need to research what property is owned by the person filing bankruptcy.

This method is more difficult to use than the others, but can be an excellent way to buy property below market value. There are many methods to learn about how to buy land cheap. The above are just a few.

Buying Real Estate at Tax Sale. How to buy Real Estate at a tax sale. This is a great way to get a good deal on property, but auctions are a buyer beware place. Know before you buy.

Buying Real Estate at Foreclosure Auctions. Buying Real Estate at Foreclosure Auctions. To be successful you need to know the property, its value, and any liens or other title problems.